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NSW holiday home rentals in jeopardy

Thousands of NSW homeowners could be prevented from letting their properties to holiday makers, with a court considering whether short-term rentals should be allowed in residential areas.

Neighbours of a holiday house on the NSW Central Coast, which is allegedly used for bucks' night parties featuring strippers, have taken the owner, Rhonda Bennic, to court to prevent her from renting it out.

Next-door neighbours John and Rosemary Dobrohotoff say the suburban Terrigal street where they live with their two small children is zoned residential, and short-term letting is prohibited.

In the NSW Land and Environment Court on Wednesday, their lawyer Jack Lazarus said the only way to curb loud-partying tenants was to prevent the six-bedroom house from being rented at all.

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"Short of granting the injunctive relief that my client seeks, this anti-social behaviour will not stop," he said.

Ms Bennic's barrister Kathryn Millist-Spendlove said she had done as much as any property owner could to ensure her tenants abided by the rules.

"She has them sign a code of conduct, she takes a bond, she makes them write a list of everyone staying at the property," she said.

Ms Bennic has said she will suffer financial hardship if she is not able to rent the property to cover mortgage repayments and to enable her to care for her mother, who has dementia.

But Mr Lazarus said any hardship suffered was her own fault.

"She ought not have proceeded with this purchase without making proper inquiries ... If she's suffering financial hardship that's because she went in with her eyes open," he said.

Ms Millist-Spendlove said local communities would suffer if holiday homes could not be let.

"The availability of that type of housing allows people to come to the area. They spend money and create jobs.

"A town that has a large tourist population has the amenities for (them), and the locals will benefit."